Happy New Year - our first newsletter of 2021! Throughout this year we will continue to bring you news and developments relating to the charities sector.
Sport England has been responding to queries by asserting that it would be published ‘by the end of this month’ and it was. It arrived on Monday 31 October, and can be viewed here.
The Code has, at its heart, five Principles of good governance:
- Standards and Conduct
- Policies and Processes
Compliance with the letter of the Principles is not mandatory but Sport England and UK Sport:
‘hope that all funded bodies – regardless of their scale and the size of the award – would recognise the importance of these Principles.’
The Code will be mandatory for all sports bodies seeking public funding in the next funding period. That will include a number of charities seeking Sport England funding for the first time as a result of the extended remit of Sport England and in particular the focus on encouraging physical activity set out in the Government’s strategy for sport Sporting Future.
Following the launch of the Charter for Sports Governance, commentators expressed concern that the Code would not provide adequately for organisations that are seeking a modest amount of public funding to support work which they already do or face barriers to complying with some aspects of the Code. For example, many membership charities harness the passion of volunteers to do fantastic work encouraging people to make physical activity part of their lives. But the volunteer-run membership structure which is such a strength also makes it harder to embrace some aspects of the Code, such as the requirement for ‘independence’ at board level.
The Code neatly side-steps the risk of an inflexible one size fits all approach. The Code sets out three tiers of investment. UK Sport and Sport England will:
‘… at their sole discretion, place each of their investments into the Tier they consider most appropriate, taking account of the circumstances of the investment and the organisation, and the … broad definitions of the Tiers.’
The three Tiers (surely destined almost inevitably to be thought of as bronze, silver and gold) are:
- Tier 3 – for larger or longer term investments, generally including those of over £1,000,000.
- Tier 2 – investments which do not fall within Tier 1 or Tier 3, typically of between £250k - £1m. Where an investment is placed in this Tier, it must meet all Tier 1 requirements and the funder will determine how many of the Tier 3 requirements must be met.
- Tier 1 – the minimum level of governance, required of organisations receiving one-off or short-term funding, typically less than £250,000.
Reviewing, the Code it is possible to highlight a number of interesting mandatory requirements. For full details of those, click here.
Now that the Code is in place, Sport England will need to consider how to ensure that National Governing Bodies and other organisations it funds comply with the code.
Where Tier 3 requirements apply:
‘Sport England and UK Sport will look for a formal commitment from organisations to meet Requirements within set timescales.’
In some cases that will involve real challenges as indicated above. For example:
- The minimum proportion of both women and men on the board of funded bodies has increased to 30%. While some would argue that the target should be parity of the sexes since this has been an area of focus for many years, some organisations will struggle to get a board which has at least 30% of members who are women.
- The current code requires a proportion of board members to be ‘independent’ that requirement will need to be considered carefully by the many membership charities that are seeking Sport England funding on the basis that they can deliver physical activity and ‘help create a much healthier and more active nation’ as the Government’s strategy for sport Sporting Future envisages. Many membership charities see it as a key part of their identity that trustees are drawn from their membership and some would find it difficult to introduce a requirement to recruit from non-members in the interest of independence. Such organisations will need to be able to justify the approach they adopt and demonstrate how they ensure that trustees are able to avoid group think.
- Some organisations have struggled to make much-needed progress on other aspects of diversity including for BAME and disability representation. Without specific targets for such representation, they may find it difficult to make the meaningful change that is called for in this area;
- New requirements in relation to term limits and board size will be seen as unduly constraining by some;
- The requirement of the Charter that membership organisations ‘work to ensure that internal democracy is vigorous and healthy’ will have been greeted with mixed feelings by some chairs and CEOs. It is undoubtedly true that ‘vigorous democracy is important for organisations with membership bases’ and most trustees and chief executives I work with are passionate about this issue. Sadly, it is also true that many organisations spend a disproportionate amount of time and effort responding to the actions of a small minority of members who employ democratic mechanisms in a way that does not always seem to have the interests of the organisation as a whole, or even in the interests of a substantial minority of members, at heart. Finding the right balance between fostering member engagement and delivering the aims of the organisation will continue to require attention.
Anthony Collins Solicitors is hosting a meeting of leaders from membership charities in the sport and leisure sector at the end of November. If you know anyone who may be interested in joining in this or future events along the same lines, please get in touch.
If you would like more information, please contact Shivaji Shiva.
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